Bad Check Proposal Postponed in California

A bill that would outsource bad-check restitution programs to outside collection firms and increase the fees the firms can charge people who bounce checks was pulled by its supporters this week prior to a scheduled debate before the California Public Safety Committee. A spokesperson for the bill’s sponsor said there were concerns that the proposed legislation wouldn’t get committee approval.

The bill, AB 2606 by Assemblyman Bill Emmerson, (R-Rancho Cucamonga), would increase bad check processing fees from $35 to $50, authorize inclusion of returned check fees in the processing fees, and increase to $1,200 the allowable aggregate total to be collected, up from $1,000. The bill also would increase the amount that the district attorney may pay victims for assessed bank fees to $15 per check, up from $10 per check,

Emmerson’s bill is supported by retailers and other business groups, but opposed by consumer groups ("California Pols to Debate Bad-Check Restitution Bill Today," April 1).

A committee consultant has advised that language in the bill regarding the relationship between the district attorney’s office and private collection firms be changed to make the bill more palatable to fence sitters and thereby gain approval, according to the spokesperson. The changes are still under discussion, though the spokesperson said the bill could be brought back for a committee vote – with the new wording – within a few weeks.

“Every year California retailers lose billions of dollars in bad check losses,” according to the California Retailers Association. “For over 20 years, California’s retailers have been able to turn to their local District Attorneys for help to recover a portion of these losses after check writers have repeatedly ignored demands to make good on their checks.” Last year retailers recouped more than $16 million in restitution, which would “ultimately have been paid by all consumers through higher prices,” according to the association.

However, opponents says that the legislation would encourage private collection firms “to threaten innocent consumers with jail to coerce them into paying collection fees,” according to Deepak Gupta, a director with Public Citizen, a Washington consumer advocacy group.

Public Citizen, a Washington consumer advocacy group had opposed the bill, in part, because the group contended firms that win the contract with a local DA would have a competitive advantage because they would be the only ones who could use the power of the district attorney’s office to collect the fees.